Shares of mainland property developer Country Garden Holdings soared more than 11 percent yesterday following the company's announcement Friday to issue 3.6 billion yuan ($500 million) in bonds.

Buoyed by the news, the stock rose by 15 percent, to HK$7.73, at one point in the day before settling at HK$7.48, or HK$0.77 above its opening price.

About 80 million shares of the stock changed hands, and its turnover for the day was HK$594 million.

Investment bank UBS gave Country Garden a "buy" rating and set its target price at HK$14. It said the issuance of bonds would send a positive message to the market.

UBS said that although the company's credit condition remains tight, its financial status is stable with decent sales and 2.5 billion yuan in hand.

CASH Asset Management Associate Director Patrick Yiu applauded the fundraising move by Country Garden.

"Given the abundant land reserves of Country Garden, the company needs a huge amount of capital to bankroll its property projects," he said. "The bond issue could temporarily ease the company's financial tension."

However, First Shanghai Securities Strategist Linus Yip remained skeptical about the company's outlook.

"I believe the (stock) surge was more of a technical rebound, as its shares had been low for some time," Yip said. "In the long run, the company is still under the fear of tightening control by the central government."

Country Garden initially proposed to issue yuan-denominated bonds worth up to 4.3 billion yuan, but lead manager Merrill Lynch agreed to subscribe just 3.6 billion yuan initially.

After the success of debt issuance this time, Yip did not rule out the possibility that other mainland property companies might follow suit and carry out bond sales. But, he said, "the market has yet to recover. They might bear a certain amount of risk."

(HK Edition 02/19/2008 page2)